For most retirees, Medicare provides their primary health insurance coverage. Although Medicare sounds like a singular program, there are actually two different versions of Medicare that retirees can choose from.
Whether enrolling in Medicare for the first time or making a change in coverage during one of the open enrollment periods offered during the year, it’s important to understand how each plan works, as well as the differences between them, so you can choose the right plan for your circumstances and needs.
Original Medicare
Original Medicare consists of:
- Part A which includes in-patient hospital and skilled nursing care, some types of at-home care and end-of-life hospice care.
- Part B covers services from your doctor, diagnostic screenings, durable medical equipment, outpatient care and many preventative services.
There are two additional policies you can (and in some cases must) purchase:
- Part D is a prescription drug plan offered by a private insurance company. Original Medicare doesn’t include prescription drug coverage, and there can be significant penalties if you don’t have this coverage.
- Medigap supplement coverage helps with Medicare’s deductibles and copays. If you choose Original Medicare, it’s important to purchase Medigap coverage within a set time period to ensure you’re eligible for coverage at the best price. Medigap coverage is also offered by a private insurance company.
Medicare Advantage
Medicare Advantage, also known as Part C, is a plan offered by a private insurance company that has been approved by Medicare. A Medicare Advantage plan will include Parts A and B of Original Medicare coverage, and it generally includes Part D (prescription drug coverage) as well.
Medicare Advantage is substantially similar to Original Medicare, but in some cases you may be limited to using doctors and other providers who are in the plan’s network. Medicare Advantage plans may have different out-of-pocket costs than Original Medicare, and the plan may include a supplemental policy that is different from the Medigap coverage generally available with Original Medicare.
Comparing the plans
There are a number of differences between Original Medicare and Medicare Advantage you’ll want to review as you make or revisit your choice.
Choice of doctors and hospitals
| Original Medicare |
Medicare Advantage |
| You may choose any doctor or hospital in the U.S. that accepts Medicare. |
In most cases you are limited to doctors, hospitals and other providers within the plans’ network for non-emergency care. |
| You generally won’t need a referral to see a specialist. |
You may need a referral from a doctor within the network to see a specialist. |
Cost of coverage
| Original Medicare |
Medicare Advantage |
| There is no cost for Medicare Part A. You will pay a monthly premium for Part B, which could be increased based on your income level via the IRMAA surcharge.1 There will also be a separate premium for the Part D prescription drug plan. |
There is a charge for the Part B premium, plus the cost of the Advantage plan’s premium. |
| For services covered under Part B you’re generally responsible for 20% of the amount covered by Medicare after the deductible has been met. This is the plan copay. |
Out-of-pocket costs will vary; each Advantage plan will have its own copay amounts. |
What’s covered?
| Original Medicare |
Medicare Advantage |
| Original Medicare covers most medically necessary services and supplies in hospitals, doctors’ offices and other facilities. Original Medicare doesn’t include most dental care or routine eye care. |
An Advantage plan must cover all medically necessary services that are covered by Original Medicare. For some medical needs, plans may determine their own criteria for “medically necessary.” Plans may offer extra coverage for services not included with Original Medicare.
For most services you generally don’t need prior authorization for coverage. |
| For services covered under Part B, you’re generally responsible for 20% of the amount covered by Medicare after the deductible has been met. This is the plan copay. |
With many plans you might need prior authorization for certain services or medical supplies. |
When can I enroll in Medicare?
If you’re 65 and receiving either Social Security or Railroad Retirement benefits, you’ll automatically be enrolled in Medicare Parts A and B. If you prefer Medicare Advantage, you can enroll during your initial enrollment period, which includes the three months prior to your 65th birthday, the month of your birthday, and the following three months for a seven month overall period.
If you’re not receiving Social Security or Railroad Retirement benefits at age 65, you must enroll over a similar seven month period once you’re no longer receiving healthcare coverage through an employer.
If you enroll in Original Medicare during the original enrollment period, you can’t be denied Medigap coverage, nor can providers increase your premium due to any health concerns they might have about you.
If you don’t enroll in a Medigap policy during this initial enrollment period, whether that’s because you decided on Medicare Advantage or simply didn’t enroll, if you decide to enroll later, Medigap providers can raise the price based on any health or other issues they have with your application—or deny coverage altogether.
Open enrollment periods
Beyond the initial enrollment period, there are several open enrollment periods during the year when you can change your coverage.
Original Medicare annual open enrollment
The annual open enrollment period for Medicare is from October 15 through December 7. During this open enrollment period, you can make a number of changes, including:
- Switch Part D prescription drug coverage plans if you are on (and staying with) Original Medicare
- Switch from Original Medicare to Medicare Advantage
- Leave Medicare Advantage for Original Medicare. Note you will need to choose a Part D plan if you do this
- Move from your current Medicare Advantage plan to another Medicare Advantage plan
Medicare Advantage open enrollment
The Medicare Advantage open enrollment period runs from January 1 through March 31 each year. During this time period you can:
- Change from one Medicare Advantage plan to another
- Move from Medicare Advantage to Original Medicare
Some reasons you might switch from one Advantage plan to another:
- You require new prescription medications that are not covered by your Advantage plan’s prescription drug coverage’s network
- Some or all of your doctors, your hospital, or other services are no longer considered in-network under your current plan
- You plan on traveling more and perhaps living in another part of the country for a portion of the year, and your current plan doesn’t cover doctors or facilities in these parts of the country
Some reasons that you might want to switch from Medicare Advantage to Original Medicare:
- With Original Medicare, you can use any provider who accepts Medicare and you can select a standalone Part D prescription drug plan. There are virtually no restrictions on doctors or providers.
- Your health situation is changing and you need to see doctors at a new facility that may not be in your Advantage plan’s network.
- If your health situation hasn't changed, but your Advantage plan is vastly realigning the providers in their network, it might make sense to consider moving to Original Medicare to avoid the current changes and any future network changes.
Which one is right for you?
Both Original Medicare and Medicare Advantage plans have their pros and cons. Though you might sign up for one or the other when you initially enroll in Medicare, it makes sense to reevaluate your situation each year and to make changes if warranted.
The best plan is the one that covers what you need with the lowest out-of-pocket expenses. It may take some research to figure out what that is, but it will be time well spent.
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